Crude rises on softer dollar, upbeat China data and Iran tensions

01 February 2012 13:09[Source: ICIS news]

SINGAPORE (ICIS)--Crude strengthened on Wednesday with ICE Brent futures climbing more than $1/bbl supported by a softer US dollar, positive economic data from ?xml:namespace>China and ongoing supply worries heightened by tensions between the west and Iran.

At 12:35 GMT, March Brent crude on London’s ICE futures exchange was trading at $112.41/bbl, up $1.43/bbl from the previous close. Earlier, the North Sea benchmark rose to a session high of $112.45/bbl, up by $1.47/bbl from the previous close.

March NYMEX light sweet crude futures (WTI) were trading at $99.35/bbl, up 87 cents/bbl on the previous close. Earlier the US benchmark rose to a session high of $99.37/bbl, up by 89 cents/bbl from the previous close.

The US dollar fell against the euro and other leading currencies making crude, which is priced in dollars, more attractive to international investors.

Meanwhile, China’s official Purchasing Managers Index (PMI) revealed that manufacturing grew slightly in January. The PMI Index for January rose to 50.5, up from 50.3 in December. Analysts had forecast a fall in the Index to 49.5.

Supply worries added further support to prices with US lawmakers considering further sanctions against Iran which would limit the access of Iran’s oil and shipping industry to international electronic banking facilities.

The US and its allies have imposed tighter sanctions on Iran amid concerns over Tehran’s nuclear programme which the west believes is focused on the development of nuclear weapons. The EU is set to impose an embargo on Iranian oil imports into Europe from 1 July.However, Iran has threatened to halt exports to the west before that date.

Iran is the second largest producer in OPEC and the world’s fourth largest oil producer with an output of around 3.5m bbl/day. The nation is also the third largest oil exporter, according to data from the International Energy Agency (IEA).

Iran has also threatened to blockade the Straits of Hormuz, used to transport oil shipments from Saudi Arabia, the United Arab Emirates and other Gulf states, which amounts to around one third of all global crude exports.

The markets have also been buoyed by hopes of an agreement between Greece and its creditors which must be concluded in order for Athens to receive further bailout funds of around €130bn ($171bn) from the EU, European Central Bank (ECB) and the IMF.